Bitcoin

I honestly don't know if this is genius or a whole world of trouble, or just one of those things that will never take off, but I've seen a little swell of buzz about this in the tech circles I keep and read up on:

Aren't there huge implications like potential for money laundering though? I mentioned this to an accountant mate and he was of the opinion it'd swiftly be hurt by governments stamping on currency exchange stuff they mention apparently.

It's an interesting idea. Bitcoins are easy to test for validity, but hard to make, thanks to them using public key cryptography. What I didn't understand at first was how they are transferred - anything on a computer is easy to copy. From their wiki's front page:

A coin contains the owner's public key. When a coin is transferred from user A to user B, A adds B’s public key to the coin, and the coin is signed using A's private key. B now owns the coin and can transfer it further. A is prevented from transferring the already spent coin to other users because a public list of all previous transactions is collectively maintained by the network. Before each transaction the coin’s validity will be checked.

I think this public list is likely to be the weak point in such a system.

Also, anything using public key cryptography is going to be wiped out if they ever get quantum computing to work. Despite some interesting noises on that front I don't think that's likely to happen any time soon - possibly not in my lifetime. But odds are it will happen, so if bitcoin does take off, it'll be an interesting day when someone programs a quantum computer to generate bitcoins, and wipes out everyone's bitcoin accounts.

Dirtbox wrote:
Well, considering you can't turn money into coins, only the other way around, I would assume not.

Of course you can turn money into coins. That's the function of money laundering. Use money to buy tat on ebay, then sell it back to other people, assuming ebay supports bitcoins in the future. Bingo, you've used money to get bitcoins.

I guess it's a question of if it really explodes in popularity and makes an impact on 'real' currencies. At the moment it's small scale enough it's not a problem to banks and government. I can see how it could be though.

I don't quite understand how they're planning to stop the production of bitcoins in the future. Apparently there's an annual limit which halves each year, so if I understand what they're doing, it's not just a factor of the computing power you throw at it. Since the software is open source, you could modify it to ignore the limit, and I don't see how they can tell it's not playing nice.

Hmm, I suppose if it's using public key cryptography, they're probably signing it using something that needs to be got from the bitcoin network. Just a guess, but that might work.

The only thing I can think of that stops it being easy to compromise yet still distributed rather than centralised is if it relies on some kind of comparison to the integrity of other instances of the software polled at random?

This is far from my field of expertise though so that's very much a semi-educated guess

Edit: I think that's perhaps just what you said in your last sentence mal, reading back

Coincidentally I was just reading about this yesterday on Reddit. Seems that it's the preferred method of currency for "Deepweb" and all that murky stuff where it's swimming in CP (not 4chan style, like serious paedophiles). Definitely dodgy as I'd imagine it's untraceable so if there's any problems then you're fucked.

theres a few bitcoin exchanges... lets you sell bitcoins directly for cash

i know a couple of people who have bought new GPUs just to harvest bitcoins (in a triple crossfire setup) and apparently they have made their money back and profiting already (although obviously this could be bullshitting on their part if they just wasted a bunch of cash)

I like how they brought the value down to practically 0 by selling a lot of coins. Meanwhile, loads of geeks stocked up on cheap coins as they got cheaper and cheaper, then the exchange closed and they're currently trying to reverse everything to the moment before the hacked accounts started selling. Which is pissing off all the geeks with their cheap coin